Amazon’s (Nasdaq: AMZN) fourth quarter revenues grew 20% over the year to $25.59 billion, missing the Street’s target of $26.06 billion. EPS of $0.51 was also significantly short of the market’s projection of $0.66 for the quarter.

By segment, revenues from products grew 16% to $21.07 billion while revenues from services grew 44% over the year to $4.52 billion.

They ended the year with revenues growing 22% over the year to $74.45 billion. EPS grew significantly from a loss of $0.09 a year ago to earnings of $0.59 per share for the year.

For the current quarter, Amazon projected revenues of $18.2 billion-$19.9 billion, again short of the market’s projections of $19.7 billion. They projected the quarter’s operating income at a loss of $200 million to profit of $200 million.

Amazon Web Service Expands

Amazon also continued to invest in the expansion of their cloud services offering. During the quarter, they added additional services such as AppStream and Kinesis. Amazon AppStream is a flexible, low-latency service that deploys and renders game like applications on the AWS infrastructure and enables streaming of the output to end-user devices like personal computers, tablets, and mobile phones. The service is best suited for games and applications so that they can operate at high efficiency irrespective of the local machine’s storage capacity.

Kinesis is another service for streaming data at a large scale. It collects and processes large volumes of data from multiple sources and enables processing of information real-time from sources such as web site click-streams, social media, and operational logs. The service lets developers build real-time dashboards, and identify exceptions and alerts to make real-time decisions.

They also introduced Amazon WorkSpaces, which is a fully managed desktop computing service in the cloud that lets end-users access documents, applications, and resources using any device including laptops, iPad, Kindle Fire, and Android tablets.

They also continued to grow their geographical footprint and are now preparing for a launch in China, which will become their tenth region globally.

Amazon has seen strong growth in Prime membership. During the holiday season last year, membership for Prime was so much in demand that Amazon had to limit new Prime membership signups during peak periods. Amazon is making the service more attractive by improving their digital content library. At the end of the year, their video library selection for instant streaming movies and TV episodes increased from 33,000 to over 40,000. They also tied up with consumer electronics companies such as Samsung and Hollywood studios like Warner Brothers and Lionsgate to offer subscribers a premium 4K Ultra HD viewing capability.

Like Netflix, Amazon is also investing in digital content creation. Amazon Studios recently announced plans to create original content including full original series, comedies, and dramas in 4K Ultra HD. They debuted original series Alpha House and Betas and released the first three episodes for all viewers to enjoy. Additional episodes of the series are available for viewing only on Prime Instant Video membership.

Current Prime membership is available at a price of $79 a year. But Amazon is now looking to increase that by $20-$40 annually. Amazon claims that the increase is needed to offset rising shipping and fuel costs. Currently Amazon offers next day shipping to Prime members for free. Unlike Netflix though, this price hike is likely to impact existing customers as well.